World View: HSBC Holdings Admits to Criminal Money Laundering

This morning’s key headlines from GenerationalDynamics.com

• ‘Pervasively polluted’ HSBC Holdings admits to criminal money-laundering
• Do you remember Household Finance Corp?
• Why was HBSC even investigated?
• Possibly crucial battle is building in Damascus, Syria
• Israel’s government nears collapse over drafting of ultra-Orthodox Jews
• Hillary Clinton appears to give Iran an ultimatum over nuclear weapons

‘Pervasively polluted’ HSBC Holdings admits to criminal money-laundering

A new criminal banking investigation is so bad that it’s comparable incriminality to the Libor scandal. HSBC is the largest bank in Europe,and one of the largest in the world, with 7,200 offices in 80countries, and 2011 profits of $22 billion. The U.S. affiliate, HBUS,has 470 branches across the country, with 4 million countries. HBUSprovides thousands of banks with “U.S. dollar services,” which meanservices to move funds and exchange currencies around the world. 

The Senate Subcommittee On Investigations, led by Silent GenerationDemocrat Carl Levin, has been investigating HSBC as a “testcase” for money-laundering violations, and the range of criminalacts is breathtaking, including the following:

• HSBC laundered $7 billion in physical U.S. dollars from Mexico to the U.S. in 2007-8 alone, even though it was obvious to anyone who looked that it was drug cartel money. A lot of the money went through the Cayman Islands to avoid detection.
• HSBC actively circumvented U.S. safeguards to block transactions involving terrorists and drug lords, and was able to launder $19.4 billion in 25,000 transactions with links to Iran.
• HBUS provided U.S. dollars and banking services to Saudi banks supporting al-Qaeda after 9/11.

David Bagley, the head of compliance, testified before the Senate onTuesday and announced that he was stepping down. He tried to spin thecrimes as innocent mistakes and “lax controls,” but there’s no waythat these actions were not intentional. This is the same as in thecase of Barclays, where the release e-mail messages reveal a criminalculture of people willing to screw anyone for their own gain.According to Levin, “The culture at HSBC was pervasively polluted for along time.”

The Senate report also blames regulators for failing to investigatethe obvious crimes going on. As I’ve written many times, Gen-Xregulators have not only refused to investigate and prosecute even themost obvious financial crimes, they actually cooperate with bankstersin continuing to defraud the public. One of the worst offenders was New York Insurance Superintendent Eric Dinallo who spent several months in 2008 helping the banks and

Since HSBC is just a test case, it’s very likely that other bankscommitted similar crimes. U.S. Senate and Sky News

Do you remember Household Finance Corp?

On February 9, 2007, I wrote about how mortgage-backed securities werecollapsing in value because of bad subprime mortgage loans. ( “Rapid collapse of ABX index indicates that investors may be starting to panic.”) Most pundits talkabout the financial crisis beginning in 2008, but readers of my website were aware that the crisis was already in full swing in February,2007, with the collapse of the housing bubble. 

That article was triggered by a press release from Household FinanceCorp., a venerable old American consumer credit firm that HSBCacquired in 2003, renamed HSBC Finance Corp. The press release saidthat they expected to have $1.75 billion in unanticipated bad debts,because so many people were defaulting on their subprime mortgages.Another major institution, New Century Financial Corporation, made asimilar announcement at the same time.

Here’s an excerpt from the press release that’s almost hilariousto read today:

The impact of slowing house price growth is beingreflected in accelerated delinquency trends across the USsub-prime mortgage market, particularly in the more recent loans,as the absence of equity appreciation is reducing refinancingoptions. Slower prepayment speeds are also highlighting the likelyimpact on delinquency of higher contractual payment obligations asadjustable rate mortgages reset over the next few years from theiroriginal lower rates.

In other words, the housing bubble was bursting, and a lot of peoplewere delinquent or defaulting.

What’s signficant about all this in retrospect is that we now know:

• The real estate bubble was collapsing in early 2007.
• The Gen-X financial engineers that had created the fraudulent mortgage-backed securities could now provably see that their models were wrong and their securities were fraudulent.
• And yet, sales of these fraudulent securities SPED UP throughout 2007, because the Gen-X financial engineer criminals and their criminal Boomer bosses wanted to make as much money as possible before the whole system crashed.

In July, 2007, Citigroup’s chief executive, Charles O. Prince, saidthat he’s still going full steam ahead with credit and leverageddeals. He said, “As long as the music is playing, you’ve got to getup and dance. We’re still dancing.” Now we know that by “dancing,” hemeant that he was going to defraud as many people as possible whilethe music was still playing. 

Why was HBSC even investigated?

I’ve been writing for years about the overwhelming circumstantialevidence showing that crimes were committed by banksters in the early2000s that led to the global financial disaster, which is farfrom over. And I’ve been repeatedly astonished that the regulators,led by Attorney General Eric Holder, adamantly refuse to investigateand prosecute these crimes, even when it’s screamingly obviousthat serious crimes have been committed. 

So I have to ask the same question that I asked in the case ofBarclays and the Libor scandal: Why are these crimes being investigatedand prosecuted now? What’s changed?

And I come back to the same answer for HSBC as I did for Barclays.It’s no coincidence that they’re both British banks, and thatthe criminal activities were investigated by Americans. Eric Holderand other Washington politicians of both parties will not investigateCitibank or Bank of America because the politicians receive hugecampaign contributions from these banks. But since HSBC and Barclaysare British banks, it’s far less likely that there’s a campaigncontribution connection. British regulators would never haveinvestigated British banks on their own, until they were forced todo so by the Americans. But you can be sure that British regulatorswill get their revenge before too much longer.

Possibly crucial battle is building in Damascus, Syria

During the 16 months of fighting in Syria, the capital city Damascushas largely escaped the violence. But now a spokesman of the FreeSyrian Army is saying that thousands of fighters have converged onDamascus for a final battle to “liberate Damascus.” The forces of theBashar al-Assad regime are using helicopter gunships to repel therebels, but rebels are making unconfirmed claims that they’s shot downan army helicopter on Tuesday with anti-aircraft weapons. Israel’sarmy intelligence chief says that al-Assad is moving troops from theGolan Heights front line with Israel and redeploying them to Damascus.As this fighting has proceeded, a Turkish official said a Syrianbrigadier general and several other military defectors were among1,280 Syrians to have fled to Turkey overnight. ReutersNow is a good time to repeat that Syria is in a generational Awakeningera, and so a crisis civil war is impossible at this time. If I wereto guess, I would say that the most likely scenario is that at somepoint al-Assad will be forced to step down, and then the civil warwill fizzle, despite analysts’ predicts that it will continue even ifal-Assad leaves. That could be one possible outcome of the currentbattle in Damascus. Once the civil war fizzles, U.N. envoy Kofi Annancan claim to have brought peace to the Mideast. 

Israel’s government nears collapse over drafting of ultra-Orthodox Jews

Israel’s government has increasingly been in crisis over militarydraft exemptions for ultra-Orthodox Jews and Israeli Arabs, as we reported two weeks ago. OnTuesday, Israel’s government appeared close to collapse, after theKadima party withdrew from the government coalition of prime ministerBenjamin Netanyahu over a disagreement about the drafting ofultra-Orthodox Jews. Netanyahu submitted a compromise proposal onTuesday, that was rejected by Kadima as “complete rubbish,” leading tothe breach. Attempts to create a new governing coalition are underway, but so far have not been successful. Haaretz

Hillary Clinton appears to give Iran an ultimatum over nuclear weapons

At a press conference in Israel on Monday evening, U.S. Secretaryof State Hillary Clinton said that everyone prefers a diplomaticsolution to the Iran crisis, but “We will use all elements of American power to preventIran from obtaining a nuclear weapon.”

This was part of a prepared statement, and it appears to be anultimatum. Until now, the Obama administration has never explicitlysaid that the U.S. would use military power to prevent Iran fromobtaining a nuclear weapon. Jerusalem Pos

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